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Wednesday, February 19, 2014

The Future of Bitcoin

Bitcoin became very popular in 2013, when the value of a single unit
of virtual currency rose from $13 to more than $1000 in a year.

Travelers began using Bitcoins while touring the world when a they noticed a Bitcoin ATM appeared in a Vancouver coffee shop. The U.S. Senate committee held hearings at which regulators supported Bitcoin and other virtual currencies.

Bitcoin ATM’s are now among British Columbia, Canada, Hong Kong, Europe and Asia, with talk about one in the U.S..

Bitcoin is not issued or backed by a government or a business, it runs on computer code on a decentralized network.

Businesses like Overstock.com and some Subway shops have started to accept Bitcoin, although, it is still not a universal exchange.

Why worry?

Economists are skeptical of Bitcoin’s power because it lacks attributes of a useful currency. Money serves three purposes: functions as a medium of exchange, a unit of account, and a store of value.

The digital crypto-currency has been in major headlines for a while now. This week Bitcoin collapsed in the market.

Anonymous owners of black-market website Silk Road announced that
hackers stole $2.7 million worth of Bitcoin. Exchange was halted to
ensure the safety of customer funds. Also, Mt.Gox, one of the world’s
largest bitcoin exchange, said it would temporarily prevent customers
from removing their bitcoins from its online exchange. Investors are
speculating that Mt.Gox may be on the verge of bankruptcy.

Bitcoin prices have plunged dramatically on Gox, see that the price of bitcoin on Bitstamp was $640 and $250 on Gox.

Bitcoin currency has been linked with payments of underground
websites that deal with drugs, weapons and other illegal merchandise.

Since Bitcoin doesn’t have a currency characteristic, it cannot be
deposited in the bank. It is held in ‘digital wallets’ that have proven
to be vulnerable to thieves and hackers.

Lenders will not use bitcoins as a unit of account for consumer credit, auto loans, mortgages, or other credit.

Bitcoins future is wobbly, there are many reason why this new technology will disrupt our economy, good or bad:

Bitcoin is in its infancy, the tranactions are untraceable and
supposedly tamper-proof. This could result in the government losing
control in the economic marketplace.

“[Imagine] a group of generals of the Byzantine army
camped with their troops around an enemy city. Communicating only by
messenger, the generals must agree upon a common battle plan. However,
one or more of them may be traitors who will try to confuse the others.
The problem is to find an algorithm to ensure that the loyal generals
will reach agreement.”

Bitcoin is pseudonymous, not anonymous, it isn’t visible, although, it is possible to copy, print, and share the codes.

Along with Bitcoin, Mastercoin and Ripple have arisen. They are
comparable crypto-currencies with an open source project that will add
features to the Bitcoin block chain.

The Bitcoin block chain offers a platform that isn’t controlled by
anyone. All can participate and the system cannot be manipulated by
governments, corporations, or bankers.

Bitcoin is capitalism 2.0!

The future will no longer be centralized! Democratization is the transfer of power from the elite to the crowd.
Bitcoin is the third democratization.

1st the Internet, it enabled the democratization of information.

2nd democratization with 3D printing, manufacturing where factories become obsolete.

3rd is democratization of money and finance. No more monopolies that control our money and business.
The currency application of Bitcoin was version 1.0. The block chain of Bitcion is 2.0 = CAPITALISM